Element 25 Ltd (ASX:E25) has received confirmation from the Department of Water and Environmental Regulation (DWER) that a groundwater abstraction allocation of 1 gigalitre per year has been approved for the Butcherbird Manganese Project.
This licence application was based on detailed groundwater pump testing, aquifer modelling and subterranean fauna surveys to collect sufficient baseline data to understand the aquifer ecosystem.
The groundwater allocation is a requirement for the operation of the processing plant which will generate around 365,000 tonnes per annum of high-quality manganese concentrate for export via Port Hedland under the company’s take or pay offtake agreement with OM Materials Pte Ltd (OMS), a subsidiary of ASX-listed OM Holdings Limited (ASX:OMH).
Shares have hit a new record high of $1.985 this morning, more than 7 per cent up on the previous close, while the company's market cap sits at approximately $220.8 million.
“Clear runway to completion”
E25 managing director Justin Brown said: “It is fantastic to be able to confirm that the final permitting hurdle has been met and that the project is now on a clear runway to completion in the first quarter of 2021 as promised to our investors some nine months ago.
“Once again, it is a testament to the team that we have achieved so much in such a short timeframe.”
Going forward, a management strategy has been defined which will monitor aquifer health on an ongoing basis to detect and mitigate any potential environmental impacts and to maintain the health of subterranean ecosystems during operations.
On-track for Q1 production
The company remains on track for a production start this quarter at Butcherbird.
It recently commenced the construction of the processing plant and site infrastructure, including processing plant, offices, roads and civil engineering, which are on schedule for commissioning this quarter.
Offtake secured
Key commercial terms have been agreed under a non-binding term sheet to sell 100% of the manganese ore produced (up to 365,000 tonnes per annum) from the first stage of the project development to OMS under a take-or-pay offtake arrangement.
The company is now in the final stages of drafting the formal documents.
In addition, key commercial terms have also been agreed under a non-binding term sheet to sell 50% of the manganese ore produced from the second stage of the project development to Semeru Energy Limited (Semeru), a company headquartered in Singapore.
The Semeru term sheet provides an exclusivity period until June 30, 2021, during which the parties expect to finalise the definitive agreements.